Correlation Between Greenhill and Goldman Sachs

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Can any of the company-specific risk be diversified away by investing in both Greenhill and Goldman Sachs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Greenhill and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greenhill Co and Goldman Sachs Group, you can compare the effects of market volatilities on Greenhill and Goldman Sachs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Greenhill with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greenhill and Goldman Sachs.

Diversification Opportunities for Greenhill and Goldman Sachs

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Greenhill and Goldman is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Greenhill Co and Goldman Sachs Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Group and Greenhill is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Greenhill Co are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Group has no effect on the direction of Greenhill i.e., Greenhill and Goldman Sachs go up and down completely randomly.

Pair Corralation between Greenhill and Goldman Sachs

If you would invest  51,260  in Goldman Sachs Group on August 26, 2024 and sell it today you would earn a total of  9,018  from holding Goldman Sachs Group or generate 17.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy4.55%
ValuesDaily Returns

Greenhill Co  vs.  Goldman Sachs Group

 Performance 
       Timeline  
Greenhill 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Greenhill Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Greenhill is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Goldman Sachs Group 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Greenhill and Goldman Sachs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Greenhill and Goldman Sachs

The main advantage of trading using opposite Greenhill and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greenhill position performs unexpectedly, Goldman Sachs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.
The idea behind Greenhill Co and Goldman Sachs Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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